Pune-based organization Arthakranti has proposed to withdraw the existing taxation system because it is not able to generate enough revenue to cover national expenditure. Imposition of Bank Transaction Tax(BTT) will instead be an effective way to generate more revenue for government, said economist Yamaji Malkar here on Wednesday.

According to Malkar, real time gross settlement (RTGS) transaction in the country is estimated at Rs1.75 lakh crore per month and Rs2,000 lakh crore per annum. If a 2% BTT is levied on even half the annual figure, the government can easily generate Rs20 lakh crore as revenue annually, he said. This tax system will meet half the revenue requirements estimated to be around Rs40 lakh crore. In addition to this, the government can boost the revenue by not touching the current import and export taxes, he added.

Keeping the highest denomination at Rs50 will be economically viable for the country taking into consideration India's per capita income, said Malkar. In a power-point presentation, Malkar exemplified his hypothesis by tabling per capita figures of countries like United Kingdom, USA and Japan against their highest denominations.

He said that he had presented the same proposal to Narendra Modi in September 2013 when he was the chief minister of Gujarat. Modi, who was being projected as the prime ministerial candidate that time, was pleased with the proposal and had said that he would try and implement this system of taxation if he came to power, said Malkar.

Malkar also explained the rationale behind introduction of currency notes of Rs2,000. He speculated that this might be a temporary arrangement to sustain liquidity since almost 86% of the total bank notes were flushed out of the system. "I believe this denomination might be scrapped in a few years as it was introduced to mitigate the ill-effects of cash crunch," said Malkar.

"The parallel economy which funds organized crime and other antisocial practices was crippling the economy and to kill it, the government took its first step and demonetised the high value currency notes," said Malkar. He also speculated that prices of most goods and services would come down significantly, especially in real estate sector. This, Malkar opined, will allow people to buy houses without having to shell out their savings and mortgage property.